SWASTIK GROUP, NAVI MUMBAI V. ITO 15(3)(4), MUMBAI

ITA 6010/MUM/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0486 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 02-08-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 10-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.6010 /MUM/2013 (ASSESSMENT YEAR: 2008-09) M/S. SWASTIK GROUP VS. INCOME TAX OFFICER - 15(3)(4) C/O P.N. SUB RAMANIAN & CO. 703-704, 7TH FLOOR, COMMODITY EXCHANGE BLDG., PLOT NO, 2,3&4 SECTOR 19, VASHI, NAVI MUMBAI FIRST FLOOR, MATRUMANDIR MUMBAI 400007 PAN ABCFS1000P APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI V. JUSTIN DATE OF HEARING: 02.08.2017 DATE OF PRONOUNCEMENT: 03.08.2017 O R D E R PER P.K. BANSAL, VICE PRESIDENT THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-26, MUMBAI DATED 29.07.2013 FOR A.Y. 2008-09 . 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. EVEN IN TH E EARLIER TWO OCCASIONS ALSO WHEN THE APPEAL WAS FIXED AND NOTICE S WERE SENT THROUGH RPAD NONE APPEARED ON BEHALF OF THE ASSESSEE. WE, T HEREFORE, DECIDED TO DISPOSE OFF THE APPEAL AFTER HEARING THE LEARNED D. R. 3. THE ONLY ISSUE INVOLVED IN THE GROUNDS TAKEN BY THE ASSESSEE RELATED TO THE DISALLOWANCE OF A FORFEITED SUM OF ` 10 LAKHS PLACED BY THE ASSESSEE WITH THE SOCIETY AS PER COPY OF THE LETTER OF THE S OCIETY DATED 02.05.2008. 4. WE HEARD THE LEARNED D.R. AND CAREFULLY CONSIDERED THE SUBMISSIONS ALONGWITH THE ORDER OF THE AUTHORITIES BELOW. WE NO TED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDING AND DEV ELOPING REAL ESTATE. HE ENTERED INTO AN AGREEMENT FOR REDEVELOPMENT ON 09.01.2005 A ND HAD UNDERTAKEN ITA NO. 6010/MUM/2013 M/S. SWASTIK GROUP 2 ONE REDEVELOPMENT PROJECT BEING REDEVELOPMENT OF TH E BUILDING ON PLOT NO. 9, SECTOR-1, VASHI. THE BUILDING WAS OCCUPIED BY TH E MEMBERS OF M/S. C TYPE APARTMENT OWNERS ASSOCIATION. THE ASSESSEE HAS DEBITED A SUM OF ` 30 LAKHS AS DEPOSITS PAID TO THE SAID SOCIETY WHICH THE ASSESSEE CLAIMED TO HAVE BEEN MADE AS PER THE DEVELOPMENT AGREEMENT EXECUTED WITH THE SOCIETY. THE AO NOTED THAT AS PER THE TERMS AND CON DITIONS OF THE AGREEMENT, PARA 23, PAGE 13 THE ASSESSEE HAS TO PAY ` 20 LAKHS ONLY TOWARDS CORPUS FUND TO THE SOCIETY OF 176 FLAT OWNE RS. IT WAS FURTHER NOTED THAT AS PER PARA 39 OF THE SECOND AGREEMENT D ATED 06.04.2005, ` 10 LAKHS IS TO BE KEPT WITH THE SOCIETY FOR A PERIOD O F 10 YEARS. THE AO, THEREFORE, TOOK THE VIEW THAT THE SUM OF ` 10 LAKHS WAS REFUNDABLE AND DISALLOWED THE SAME. THE ASSESSEE WENT IN APPEAL BE FORE THE CIT(A). BEFORE THE CIT(A) THE ASSESSEE SUBMITTED A COPY OF THE LET TER DATED 05.02.2008 FROM THE SOCIETY AND ON THAT BASIS CLAIMED DEDUCTIO N. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. WE HAVE GONE THROUGH THE LETTER DATED 05.02.2008 T HE CONTENTS OF WHICH APPEAR IN PARA 3.1 OF THE ORDER OF THE CIT(A) . THIS LETTER STATES AS UNDER: - 'KINDLY REFER TO THE ABOVE DEVELOPMENT AGREEMENT WH EREIN YOU HAD UNDERTAKEN TO PROVIDE A WARRANTY OF 10 YEARS FROM D ATE OF COMPLETION TOWARDS DEFICIENCY IN THE QUALITY OF CONSTRUCTION A ND RESULTING WEAR AND TEAR TO THE BUILDING CONSTRUCTED BY YOU UNDER. WE WISH TO INFORM AGAIN BRING TO YOUR NOTICE THAT T HE MEMBERS OF THE BUILDING/SOCIETY HAD CONCLUDED THAT THE QUALITY OF CONSTRUCTION PROVIDED BY YOU IN TERMS OF THE ABOVE DEVELOPMENT A GREEMENT WAS NOT OF THE DESIRED QUALITY AND THAT THERE ARE SUBST ANTIAL REPAIRS AND PATCH UP WORK REQUIRED TO BE RESORTED TO BY THE SOC IETY/MEMBERS. IN THE LIGHT OF THE ABOVE WE HAD TO REQUEST YOU TO KINDLY LET US KNOW YOUR PLAN TO MAKE GOOD THE DAMAGES AND DEFICIENCIES TOWARDS THE CONSTRUCTION OF THE BUILDING WITHIN A PERIOD OF 15 DAYS OF RECEIPT OF OUR LETTER DATED 15 TH DECEMBER, 2007. FAILING WHICH WE HAD INFORMED YOU THAT YOU SHALL BE LIABLE TO REIMBURSE THE EXPENSES INCURRED BY US TOWARDS THE SAME BESIDE FORFEITURE OF THE DEPOSITS OF RS.10,00,000/- (RUPEES TEN LAKHS ONLY.) WE REGRET TO OBSERVE THAT YOU HAVE NEITHER REPLIED TO OUR LETTER NOR HAVE BOTHERED TO CONTACT US FOR THE SAME. IN THE CI RCUMSTANCES, YOU ITA NO. 6010/MUM/2013 M/S. SWASTIK GROUP 3 MAY KINDLY NOTE THAT THE DEPOSIT OF RS.10,00,000/- (RUPEES TEN LAKHS ONLY) PLACED BY YOU WITH US FOR THE PURPOSE S TANDS FORFEITED AND FURTHER THAT THE EXPENSES INCURRED BY US AS AND WHEN INCURRED SHALL BE LIABLE TO BE REIMBURSED BY YOU. THIS IS WITHOUT PREJUDICE TO OUR OTHER RIGHTS WHICH YOU MAY NOTE'. FROM THE SAID LETTER WE NOTED THAT THE SOCIETY WAS NOT SATISFIED WITH THE QUALITY OF THE CONSTRUCTION PROVIDED BY THE ASSESSE E IN TERMS OF THE DEVELOPMENT AGREEMENT. THEREFORE, THEY FORFEITED A SUM OF ` 10 LAKHS AS DEPOSITED BY THE ASSESSEE. SINCE THE SUM OF ` 10 LAKHS HAS BEEN FORFEITED BY THE SOCIETY, THEREFORE, IN OUR VIEW THE AMOUNT S O FORFEITED DURING THE COURSE OF BUSINESS CARRIED ON BY THE ASSESSEE IS A LOSS INCIDENTAL TO THE BUSINESS. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE SAID DISALLOWANCE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST, 2017. SD/ - SD/ - (PAWAN SINGH) (P.K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT MUMBAI, DATED: 3 RD AUGUST, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -26, MUMBAI 4. THE CIT - 15, MUMBAI 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.